There’s an established narrative of corporate decline and fall: incumbent grows bloated and stale; innovative, ambitious new competitors seduce its customers, leaving it overstretched; losses mount, debt piles up, talent departs, death spiral ensues.
WHSmith stands as a curious exception to this pattern. It long ago lost its place in customers’ hearts. Its stores have become a byword for shabby un-chic - overpriced, understaffed and adorned with disastrous, tattered carpets that seem to have a life of their own.
Yet every year, WHSmith seems to reports rising profits and rising dividends, largely because of a near-miraculous ability to find new costs to cut. Methuselah-like, it just refuses to die.
This is no accident of nature. In many respects, WHSmith serves as a role model for what to do in the face of decline. It could have taken the fight to the supermarkets, the specialist stationers, Amazon, Poundland and every other on-and-offline store that falls into its formidable competitive set. It could have tried to amaze and delight customers more than those rivals, while keeping prices competitive. And it would have lost.
Instead, WHSmith chose to pivot. It picked travel – airports and railway stations – as a battleground where it could win, because there it had a captive market seeking convenience and range over value and experience. Rather than let its once-proud high street division die, the retailer instead imposed a ruthless cost discipline, as much by focusing on a more limited range of profitable items as by scrimping on new carpets.
This year marks the first when revenues from WHSmith’s travel division exceeded those from its high street stores. In profits, however, travel has out-earned high street for some time. Source: WHSmith.
The fact that WHSmith survived and, say, Woolworth’s hasn’t is testament to this successful strategy. Does it ensure its place in the nation’s hearts? No. But does it ensure the company will survive in some form, and profitably? Yes. So while it’s easy to mock the carpets, the strategy is to be admired.
Image credit: Julian Dodd
- For a different take on the retailer’s strategy, see MT’s feature ‘The Dismal Decline of WHSmith’